<PAGE>



                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB

               Quarterly Report Pursuant to Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934


For the nine months ended October 3, 1998      Commission file No. 0-11201
                         ----------------                          -------

                           MERRIMAC INDUSTRIES, INC.
-----------------------------------------------------------------------------
      (Exact name of small business issuer as specified in its charter)


        New Jersey                                           22-1642321
-------------------------------                     -------------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                          Identification No.)



     
41 Fairfield Place, West Caldwell, New Jersey                    07006
---------------------------------------------        -------------------------
 (Address of principal executive offices)                     (Zip code)
       



Registrant's telephone number, including area code (973) 575-1300
                                                   --------------

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class                  Name of each exchange on which registered
-------------------                  -----------------------------------------
  Common Stock                               American Stock Exchange

Securities registered pursuant to Section 12(g) of the Exchange Act: None
                                                                     ----

     Check whether the issuer (1) has filed all reports  required to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days. 
Yes X No 
   ---   ---

     State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.

           Class                               Outstanding at October 30, 1998
-----------------------------                  ------------------------------- 
Common Stock ($.50 par value)                             1,788,849






<PAGE>


PART I.     FINANCIAL INFORMATION

ITEM 1.     Financial Statements

                           MERRIMAC INDUSTRIES, INC.
                          CONSOLIDATED BALANCE SHEET 
                          ---------------------------
                                 (Unaudited)
                                                       October 3 
                                                          1998
                                                      -----------
ASSETS
Current assets:
 Cash and cash equivalents...........................  $2,185,199
 Accounts receivable.................................   4,731,302
 Inventories:
   Finished goods....................................     512,438
   Work in process...................................   1,962,659
   Parts and raw materials...........................     866,644
                                                      -----------
      Total inventories..............................   3,341,741
 Other current assets................................     371,657
 Deferred tax assets.................................     885,200
                                                      -----------
        Total current assets.........................  11,515,099
Property, plant and equipment........................  15,657,553
   Less accumulated depreciation.....................  10,180,964
                                                      -----------
       Net property, plant and equipment.............   5,476,589
Deferred income taxes................................      65,000
Other assets.........................................      91,031
                                                      -----------
         Total Assets................................ $17,147,719
                                                      ===========
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable .................................   $1,123,181
  Accrued liabilities...............................    1,133,133
  Income taxes payable..............................      244,982
                                                      -----------
       Total current liabilities....................    2,501,296
  Deferred compensation.............................      511,629
                                                      -----------
         Total liabilities..........................    3,012,925
                                                      -----------
  Stockholders' equity:
     Common stock, par value $.50 per share:
        Authorized: 5,000,000 shares
        Issued:     2,683,398 shares................    1,341,699
     Additional paid-in capital.....................   11,147,696
     Retained earnings..............................    9,693,952
     Translation adjustment.........................       (9,207)
                                                       ----------  
                                                       22,174,140

     Less treasury stock, at cost: 894,549 shares...   (7,679,346)
     Less loan to officer-stockholder...............     (360,000)
                                                      -----------
          Total stockholders' equity................   14,134,794
                                                      -----------
Total Liabilities and Stockholders' Equity..........  $17,147,719
                                                      ===========

See accompanying notes to consolidated financial statements.






                                     - 1 -


<PAGE>

                           MERRIMAC INDUSTRIES, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                       ---------------------------------
                                  (Unaudited)

                                        
                                Thirteen Weeks Ended     Nine Months Ended
                               -----------------------   ----------------------
                               October 3  September 27  October 3  September 27
                                   1998       1997        1998        1997     
                               ----------  ----------  -----------  -----------
Net sales .................... $5,120,946  $4,983,793  $16,487,212  $14,245,236
                               ----------  ----------  -----------  -----------
Cost and expenses:
  Cost of sales ..............  2,851,976   2,734,619    9,101,555    7,710,809
  Selling, general and
    administrative ...........  1,674,779   1,546,417    5,032,992    4,650,250
  Research and development....    282,264     162,015      745,665      344,233
                               ----------  ----------  -----------  -----------
                                4,809,019   4,443,051   14,880,212   12,705,292
                               ----------  ----------  -----------  -----------

Operating income .............    311,927     540,742    1,607,000    1,539,944
Interest and other  
  income, net.................     36,876      23,273       66,191       70,917 
                               ----------  ----------  -----------  -----------
Income before income taxes ...    348,803     564,015    1,673,191    1,610,861
Provision for income taxes ...    101,000     214,000      589,000      605,000
                               ----------  ----------  -----------  -----------
Net income ................... $  247,803   $ 350,015  $ 1,084,191  $ 1,005,861
                               ==========  ==========  ===========  ===========

Net income per
  common share-basic .........       $.14       $ .21         $.62        $ .60
Net income per
  common share-diluted .......       $.14       $ .19         $.59        $ .57

Cash dividend per share of
  common stock ...............       $ -         $.09         $ -          $.27 
                                     ====        ====         ====        =====
Weighted average number of  
  shares outstanding:
  Basic ......................  1,782,675   1,693,988    1,758,769    1,680,201
  Diluted ....................  1,805,997   1,807,449    1,831,076    1,767,878
                                

See accompanying notes to consolidated financial statements.






                                      -2-
<PAGE>



                           MERRIMAC INDUSTRIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------
                                  (Unaudited)


                                                           Nine Months Ended
                                                      -------------------------
                                                      October 3    September 27 
                                                           1998         1997   
                                                      ----------   ------------
Cash flows from operating activities:
  Net income .......................................  $1,084,191     $1,005,861
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization...................   702,704        682,345
      Deferred compensation ..........................   174,977        129,030
      Stock-based compensation expense ...............    87,400             -
      Changes in operating assets and liabilities:
        Accounts receivable...........................(1,665,013)    (1,576,446)
        Inventories................................... 1,166,828       (124,189)
        Other current assets..........................  (250,454)        41,025
        Deferred tax assets...........................    34,300             -
        Other assets..................................    22,745        (92,655)
        Accounts payable..............................   (18,598)       163,828
        Accrued liabilities...........................   (69,836)       487,681
        Income taxes payable..........................   199,155        263,827
        Deferred compensation.........................   (39,047)       (22,500)
                                                      ----------     ----------
Net cash provided by operating activities...........   1,429,352        957,807
                                                      ----------     ----------
Cash flows from investing activities:
  Purchase of capital assets.......................   (2,012,535)    (1,121,213)
  Proceeds from sales of capital assets............       12,775          2,257
  Purchases of available-for-sale securities.......           -        (138,442)
                                                      -----------    ----------
Net cash used in investing activities..............   (1,999,760)    (1,257,398)
                                                      -----------    ----------
Cash flows from financing activities:
  Proceeds from the issuance of common stock.......      341,891        467,444
  Payment of dividends.............................       (1,009)      (459,044)
                                                      -----------    ----------
Net cash provided by financing activities                340,882          8,400 
                                                      -----------    ----------
Net decrease in cash and cash equivalents..........     (229,526)      (291,191)
Cash and cash equivalents at beginning of year.....    2,414,725      1,265,581 
                                                      -----------    ----------
Cash and cash equivalents at end of period.........   $2,185,199     $  974,390 
                                                      ===========    ==========

Supplemental disclosures of cash flows information:                    
  Cash paid during the period for:
    Income taxes...................................   $  390,000     $  395,000
                                                      ==========     ==========

See accompanying notes to consolidated financial statements.


                                      -3-

<PAGE>



                           MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  
  A.    Basis of presentation

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB and therefore, do not include
all information and footnote  disclosures  otherwise required by Regulation S-B.
The financial statements do, however,  reflect all adjustments which are, in the
opinion of the  management,  necessary for a fair  presentation of the financial
position of the Company as of October 3, 1998 and its results of operations  and
cash flows for the periods presented.

  B.    Net income per common share

     Effective  January 3, 1998, the Company adopted the provisions of Statement
of  Financial   Accounting  Standards  No.  128,  "Earnings  per  Share,"  which
establishes the new standard for computation and  presentation of net income per
common share.  Under the new requirements  both basic and diluted net income per
common  share are  presented.  All prior  period net  income  per  common  share
information has been restated.

     Basic net income per common  share is  calculated  by dividing  net income,
less dividends on preferred stock, if any, by the weighted average common shares
outstanding during the period.

     The  calculation  of diluted net income per common share is similar to that
of basic net income per common share,  except that the  denominator is increased
to  include  the  number  of  additional  common  shares  that  would  have been
outstanding  if  all  potentially  dilutive  common  shares,  principally  those
issuable under stock options, were issued during the reporting period.

  C.    Accounting period

     The  Company's  fiscal year is the 52-53 week period ending on the Saturday
closest to December 31. The Company has quarterly dates that correspond with the
Saturday  closest  to the last day of each  calendar  quarter  and each  quarter
consists of 13 weeks in a 52-week year. Every fifth year, the additional week to
make a 53-week  year  (fiscal year 1997 was the latest and fiscal year 2002 will
be the next) is added to the fourth  quarter,  making such quarter consist of 14
weeks.

  D.    Dividends

     During fiscal 1997, the Company paid a $.091 per share dividend (previously
$.10 per share,  adjusted for the 10% stock dividend in May 1998) in each of the
first three quarters. The dividend was eliminated by a decision of the Company's
Board of Directors (the "Board") on August 28, 1997.

     The Board announced on May 5, 1998, the declaration of a 10% stock dividend
payable on June 5, 1998 to  stockholders  of record on May 15, 1998.  Fractional
shares  were  cashed-out  and  payments  were  made to  stockholders  in lieu of
fractional shares on June 5, 1998. The basic and diluted weighted average number
of  shares  outstanding  and net  income  per  share  information  for all prior
reporting  periods  have been  restated  to  reflect  the  effects  of the stock
dividend.

                                      -4-
<PAGE>

                            MERRIMAC INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  
  E.   Purchase of common stock by Officer and Director

     The Company  sold 20,000  shares of Common  Stock from its  treasury to the
Company's Chairman,  President and Chief Executive Officer,  Mason N. Carter, on
May 4, 1998 at a price of $12.75  per  share,  which  approximated  the  average
closing  price of the  Company's  Common Stock during the first quarter of 1998.
The Company extended a loan of $255,000 in connection with the purchase of these
shares  and  amended a prior  loan to Mr.  Carter of  $105,000.  Mr.  Carter has
contractually agreed to restrictions on the resale of these shares.

     The new  promissory  note for a total of  $360,000  is due May 4,  2003 and
interest  payments are due  quarterly,  calculated  at a variable  interest rate
based on the prime rate of the Company's  lending  bank.  Payment of the loan is
secured by the pledge of the 33,000  shares of Common Stock that were  purchased
by Mr. Carter with the proceeds of the loan.

     As a result of the amendment to the terms of principal  amortization of the
prior loan, the amount of $360,000 is reflected as a reduction of  stockholders'
equity in the balance  sheet.  The Company will record  compensation  expense of
approximately   $52,000  by  charging  to  operations  over  a  one-year  period
commencing  the date of the  transaction,  as Mr.  Carter is expected to perform
services throughout this time period.

  F.   Recent Accounting Pronouncements
 
     In June 1997, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 130, Reporting  Comprehensive Income ("SFAS
130"),  and Statement of Financial  Accounting  Standards  No. 131,  Disclosures
about  Segments of an Enterprise  and Related  Information  ("SFAS 131"),  which
could  require  the  Company to make  additional  disclosures  in its  financial
statements no later than for the year ending  January 2, 1999.  SFAS 130 defines
comprehensive  income, which includes items in addition to those reported in the
statement  of  operations,  and requires  disclosures  about the  components  of
comprehensive  income.  SFAS 131  requires  disclosures  for each  segment  of a
business  and the  determination  of  segments  based  on a  company's  internal
management  structure.  The Company's management believes that the provisions of
SFAS 130 are not material to the disclosures made by the Company and a statement
of  comprehensive  income has not been  included in the  consolidated  financial
statements.  The Company's  management is still evaluating whether SFAS 131 will
require the Company to make any additional disclosures.


                                      -5-

<PAGE>


Item 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


                            INCOME STATEMENT SUMMARY
                            ------------------------
                                  (Unaudited)


The following table displays line items in the Consolidated Statements of
Income as a percentage of net sales.





                                            Percentage of Net Sales
                                 -----------------------------------------------
                                   Third Quarter            Year-to-date
                                 ----------------------  -----------------------
                                  Thirteen Weeks Ended   Thirty-nine Weeks Ended
                                 ----------------------  -----------------------
                                 October 3 September 27  October 3 September 27
                                     1998     1997          1998     1997     
                                 --------- ------------  --------- -------------

Net sales.........................  100.0%   100.0%         100.0%   100.0%   
                                    -----    -----          -----    ----- 
Costs and expenses:
  Cost of sales...................   55.7     54.9           55.2     54.1     
  Selling, general and
    administrative................   32.7     31.0           30.5     32.7
  Research and development .......    5.5      3.3            4.5      2.4
                                    -----    -----          -----    -----
                                     93.9     89.2           90.2     89.2     
                                    -----    -----          -----    -----

Operating income .................    6.1     10.8            9.8     10.8    
Other income, net ................    0.7      0.5            0.4      0.5      
                                    -----    -----          -----    -----

Income before income taxes .......    6.8     11.3           10.2     11.3   

Provision for income taxes .......    2.0      4.3            3.6      4.2      
                                    -----    -----          -----    -----

Net income .......................    4.8%     7.0%           6.6%     7.1%   
                                    =====    =====          =====    ===== 


                                      -6-

<PAGE>



                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

                           
     Quarter and nine months ended  October 3, 1998  compared to the quarter and
nine months ended September 27, 1997

     Results of operations  for the quarter  reflect an increase in net sales of
$137,000 or 2.7% and decreases in:  operating  income of $229,000 or 42.3%;  net
income of $102,000 or 29.1%;  and diluted net income per share of $.05 or 26.3%.
Nine months results of operations  reflect increases in: net sales of $2,242,000
or 15.7%;  operating  income of $67,000 or 4.4%;  net income of $78,000 or 7.8%;
and diluted net income per share of $.02 or 3.5%.

     The net sales increase was partially  attributable to delivering  shipments
against a firm order backlog in accordance with  customers'  order release dates
that  coincided  with  the  Company's  production  and  shipment  schedules.  In
addition,  customer service focus and key account program  initiatives  caused a
reduction of manufacturing cycle-time.

     Orders  received  for the third  quarter  of 1998 of  $3,599,000  decreased
$1,712,000  or 32.2%  compared  to that of the third  quarter  of 1997,  and the
backlog of firm unfilled orders at October 3, 1998 decreased $3,711,000 or 36.6%
to $6,423,000 for the same end of quarter  comparisons.  Orders received for the
first nine months of 1998 were  $13,151,000,  a decrease of  $2,823,000 or 17.7%
over the  comparable  period  last year.  Compared  to  year-end  1997,  backlog
decreased $3,335,000 or 34.2%.

     Major  satellite and defense  customers  continued to defer  purchases as a
result of delays in certain  programs.  Management of the Company  believes that
many of the satellite  constellation  programs that have been delayed may resume
and translate  into orders during the remainder of 1998 and continue  positively
into  1999.  Customer  requests  for  design  work are on the  increase  and are
currently under development  utilizing the Company's  proprietary  Multi-Mix(TM)
Microtechnology.  This technology  provides greater per unit content and enables
the Company's  entry into new markets for increased order  opportunities.  While
this  trend in  order  delays  is not  expected  to be  long-term,  an  extended
continuation  in the delay of or  reduction  in new orders for Company  products
could have a material financial impact on future sales and earnings.

     As a result of the increases in the quarter and nine month net sales,  cost
of sales increased  $117,000 or 4.3% for the quarter and $1,391,000 or 18.0% for
nine months.  The primary reason for the increase was the effect of the increase
in sales  revenue on cost of sales.  Cost of sales as a percentage  of net sales
increased .8% to 55.7% for the quarter and 1.1% to 55.2% for nine months.  These
increases  are  due  to  compensation  increases  to  hourly,  certain  salaried
engineering and supervisory workforce, an increase in levels of overtime worked,
and  additional  manufacturing  personnel  that were  hired  for the Costa  Rica
manufacturing  facility to reduce direct labor hourly costs. Some of these costs
were incurred in order to further efforts on improving  delivery  performance by
reducing the number of late ship days in the backlog.

       

                                    -7-
 <PAGE> 

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS


     Selling, general and administrative expenses increased $128,000 or 8.3% for
the quarter and increased  $383,000 or 8.2% for nine months.  As a percentage of
net sales  increased  1.7% to 32.7% for the quarter and decreased  2.1% to 30.5%
for nine months.  Increases in selling costs were attributed to additional sales
commissions  due to the  increase in sales  revenue.  The  opening,  support and
staffing of a European sales office also added to higher selling costs.  General
and  administrative  expenses  partially  increased  due to  compensation  costs
related to the hiring of additional  administrative and marketing  personnel and
higher compensation expenses resulting from last year's mid-year merit increases
to certain employees. Further increases in these expenses were related to market
development research and associated new product launch costs.

     Research and development expenses for new products,  primarily the recently
introduced  Multi-Mix(TM)  Microtechnology,  were $282,000 for the third quarter
and $746,000  for the nine months,  increases of $120,000 or 74% and $401,000 or
117%  compared to $162,000 and $344,000  reported for  comparable  1997 periods.
Research and  development  expenses in the prior year have been  reclassified to
conform to the current presentation.

     Net income decreased $102,000 or 29.1% to $248,000 for the third quarter of
1998  compared  to $350,000  reported in 1997.  Diluted net income per share was
$.14 for the third  quarter of 1998,  compared  to the per share  amount of $.19
reported for the third quarter of the prior year on a similar number of weighted
average diluted common shares  outstanding in both years.  The diluted  weighted
average number of common shares  outstanding  increased by 63,000 shares or 3.6%
for the first nine  months  compared to the first nine months of the prior year.
The increase  resulted  from common stock issued  during the second half of 1997
and first half of 1998 from the exercise of stock options and the sale of common
stock from its treasury.

     Because of the current  weakness in orders,  the  Company is  preparing  to
layoff approximately 15% of its workforce and to offer early retirement packages
to certain  employees  during the fourth  quarter of 1998.  The Company plans to
report a  restructuring  charge in the fourth  quarter of 1998 of  approximately
$200,000  before  taxes for the  reduction  in  workforce  and  voluntary  early
retirements. The saving in costs for future fiscal years from this restructuring
should  approximate  at least  $800,000  annually,  depending upon the number of
employees  accepting early retirement.  The Company further estimates that sales
will decline for the fourth  quarter 1998, as a result of the decline in backlog
for the previous quarters, and it expects to report an operating loss before the
restructuring charge.

Liquidity and Capital Resources

     The Company's financial condition remained strong throughout the first nine
months of 1998.  The Company  had liquid  resources  comprised  of cash and cash
equivalents  (including  investments in  available-for-sale  securities in 1997)
totaling approximately  $2,200,000 compared to approximately $2,300,000 in 1997.
The Company's working capital was approximately $9,000,000 and its current ratio
was 4.6 at the end of the first nine months 1998 compared to $8,600,000 and 4.3,
respectively, in 1997.

     The Company's  operating  activities  generated cash flows of $1,429,000 in
the first nine months of 1998 compared to $958,000 in 1997.  Primary reasons for
the  increase  in  operating  cash  flows in 1998 are  higher  net  income and a
decrease in inventories of $1,167,000  which was partially offset by an increase
in accounts  receivable  of  $1,665,000  as a result of higher first nine months
1998 net  sales.  The  Company  made net  investments  in  property,  plant  and
equipment of  $2,000,000 in the first nine months of 1998 compared to $1,119,000
in 1997.  These  capital  expenditures  are related to new  production  and test
equipment  capabilities in connection with the  introduction of new products and
enhancements to existing products.

                                       -8-

<PAGE>
                                    

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

   
Liquidity and Capital Resources (continued)

     The Company paid cash  dividends of $459,000 in 1997 at the quarterly  rate
of $.091  per  share  (previously  $.10 per  share,  adjusted  for the 10% stock
dividend).  The Board of  Directors  (the  "Board")  decided to  eliminate  cash
dividends on August 28, 1997. The Board approved the  declaration of a 10% stock
dividend to stockholders of record on May 15, 1998 which was distributed on June
5, 1998 along with payments made for fractional shares.

     The Company has entered  into a $7,000,000  revolving  credit and term loan
agreement with Summit Bank, at one-half  percent below the bank's floating prime
rate. Up to $2,500,000 of borrowings may be used for capital  expenditures under
the term loan.  The full line is  available  for future  borrowing  needs of the
Company for working capital and general corporate purposes.

     Management  believes that with the liquid  resources and the unused line of
credit  available,   along  with  cash  flows  expected  to  be  generated  from
operations,   the  Company  will  have   sufficient   resources   for  currently
contemplated operations in 1998.

     The Company's  manufacturing  subsidiary in Costa Rica began  operations in
the second  half of 1996.  In January  1998,  the  subsidiary  moved to a larger
17,000   square-foot   facility   and  during  1998  has  obtained  ISO  9002
certification.

     The  Company's  capital   expenditures  for  new  projects  and  production
equipment are anticipated to exceed its depreciation  and amortization  expenses
in 1998.  The  Company  has issued  purchase  order  commitments  to  processing
equipment  manufacturing vendors for approximately $700,000 of capital equipment
and building  improvements.  The Company anticipates that such equipment will be
purchased and become operational and building improvements  completed during the
remainder of 1998.

     The Company was  authorized by the Board on November 1, 1996 to purchase up
to 100,000 shares of its common stock,  depending on market conditions,  and has
purchased  approximately  4,100 shares to date under such  authorization.  There
have been no repurchases of common stock during 1997 or 1998.

     Periodically,  the Company  explores the  possibility of acquiring  similar
manufacturers of electronic  devices or companies in related fields.  Management
believes that any such  acquisitions and business  operation  expansion could be
financed  through  its liquid  and  capital  resources  currently  available  as
previously  discussed and/or through additional  borrowing or issuance of equity
or debt securities.  The additional debt from any acquisitions,  if consummated,
would  increase  the  Company's  debt-to-equity  ratio  and such  debt or equity
securities  might,  at least in the near  term,  have a  dilutive  effect on net
income per share.

                                      -9-

<PAGE>


               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Year 2000 

     The Company  recognizes the need to assure that its operations  will not be
adversely impacted by Year 2000 software failures.  The impact on operations has
been  evaluated and plans have been  formulated  to ensure Year 2000  compliance
before the end of 1998. Beginning in 1998, existing mission-critical software is
being revised to process dates for 1999 and beyond without any disruption to the
business.  Software  revisions are being performed by Company  employees and the
total estimated cost for achieving Year 2000 compliance has not been, and is not
anticipated to be,  material to the Company's  financial  position or results of
operations.

    Information Technology Systems

     Without  remediation  certain of our internally  developed order processing
and manufacturing  support  applications will not be capable of processing dates
beyond  December 31, 1999  properly.  The Company is currently in the process of
correcting  the programs,  and all business order  processing and  manufacturing
support  operations  applications  should properly process dates beyond December
31, 1999 after program  remediation is completed.  The Company does not have any
third-party software applications that are date dependent. The Company's desktop
computers  and  internal  local area  network  have been  checked  for Year 2000
problems and none have been found. All programs purchased from third parties are
believed to be Year 2000  compliant  based on  certification  received  from the
vendors.

    Non- Information Technology Systems 

     Internal  systems  used  in  our  manufacturing   processes  are  not  date
dependent.  Other support systems,  such as security and HVAC, have been checked
and will not be adversely affected by dates beyond December 31, 1999. All of the
Company's suppliers have been contacted concerning their Year 2000 readiness and
the  Company  will be  evaluating  their  responses  regarding  their  Year 2000
compliance.

    Costs to Company to Address Year 2000 Issues

     To date,  the Company has  expended  approximately  $50,000  (exclusive  of
internal  personnel  compensation  costs) to perform the program  remediation to
non-  compliant  programs and for training and other  consulting  services.  The
Company  estimates  remaining  costs to project  completion to be  approximately
$100,000.  No other  information  technology  projects  have been  deferred as a
result of the Year 2000  project as it was  scheduled  as part of the  Company's
strategic business plan.

                                      -10-

<PAGE>
 
    Risks of the Company to Year 2000 Issues

     The Company believes that the risks of the Year 2000 problem are moderately
low  because its  products  are not date  dependent  and its  internal  software
applications  should be Year 2000  compliant by December  31, 1998.  The Company
will be evaluating the Year 2000 readiness of its key suppliers  throughout 1999
and will  find  alternate  sources  for those  suppliers  that are not Year 2000
compliant.  The potential  impact and related costs resulting from the Company's
failure to find alternate  suppliers has not been determined.  In addition,  the
Company's  customers  are  evaluating  their  own Year 2000  readiness  and have
circulated  questionnaires  regarding the  Company's  level of  compliance.  The
Company  will  continue  to update  its  customer's  with  respect  to Year 2000
readiness and will also monitor the progress of its customers in order to assess
the attendant risks of inadequate Year 2000 compliance.

    Contingency Plans

     Currently, the Company does not have a contingency plan, since its products
are not date dependent.  In addition, the Company's software remediation program
is on schedule,  within its established budget and is approximately three months
from completion of its Year 2000 plans.
                 
    Recent Accounting Pronouncements

     In June 1997, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 130, Reporting  Comprehensive Income ("SFAS
130"),  and Statement of Financial  Accounting  Standards  No. 131,  Disclosures
about  Segments of an Enterprise  and Related  Information  ("SFAS 131"),  which
could  require  the  Company to make  additional  disclosures  in its  financial
statements no later than for the year ending  January 2, 1999.  SFAS 130 defines
comprehensive  income, which includes items in addition to those reported in the
statement  of  operations,  and requires  disclosures  about the  components  of
comprehensive  income.  SFAS 131  requires  disclosures  for each  segment  of a
business  and the  determination  of  segments  based  on a  company's  internal
management  structure.  The Company's management believes that the provisions of
SFAS 130 are not material to the disclosures made by the Company and a statement
of  comprehensive  income has not been  included in the  consolidated  financial
statements.  The Company's  management is still evaluating whether SFAS 131 will
require the Company to make any additional disclosures.


   Forward-looking statements

     Certain statements in this quarterly report are forward-looking  statements
based  on  current  management   expectations  and  are  subject  to  risks  and
uncertainties.  Factors  that could  cause  future  results to differ from these
expectations  include  general  economic  and industry  conditions,  competitive
products  and  pricing  pressures,  risks  relating to  governmental  regulatory
actions in  communications  and defense  programs,  and  inventory  risks due to
technological innovation.  Additional factors to which the Company's performance
is subject are described in the  Company's  reports filed from time to time with
the Securities and Exchange Commission.

                                      -11-
<PAGE>

PART II. OTHER INFORMATION

ITEM 6. Exhibits and Reports on Form 8-K.

(a) Exhibits:

Exhibit No.

  10 Stockholder's  Agreement  between  the  Company and 
     Charles F. Huber II dated as of October 30, 1998.
    
  11 Statement re: Computation of earnings per share.

  27 Financial Data Schedule for the Nine Months Ended October 3, 1998.


(b)  Reports on Form 8-K.

     A Current Report on Form 8-K was filed on August 6, 1998 reporting the 
     Company's results of operations for the second quarter and six months 1998.

     A Current Report on Form 8-K was filed on November 13, 1998 reporting the 
     Company's results of operations for the third quarter and nine months 1998.
 
                                   
              
                                             
                                       
                                      -12-
                                       
                                         
<PAGE>

SIGNATURES

     Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                          MERRIMAC INDUSTRIES, INC.
                                          -------------------------
                                                (Registrant)

    Date: November 16, 1998          By: /s/ Mason N. Carter
                                         -------------------------------------
                                         Mason N. Carter             
                                         Chairman, President and 
                                         Chief Executive Officer
                                           

    Date: November 16, 1998          By: /s/ Robert V. Condon
                                         -------------------------------------
                                         Robert V. Condon
                                         Vice President, Finance, Treasurer,
                                         Secretary and Chief Financial Officer


                                      -13-